Question

The Document Creation Center (DCC) for Arlington Corp. provides photocopying and document services for three departments in the Minneapolis office. The following budget has been prepared for the year.
  

Available capacity	9,150,000	pages
Budgeted usage:
Software Development	2,300,000	pages
Training	3,700,000	pages
Management	3,100,000	pages
Cost equation	$302,000 + $0.05	per page

If DCC uses a dual-rate for allocating its costs based on usage, how much cost will be allocated to the Software Development Department?

Multiple Choice

• $263,670.

• $191,330.

• $457,500.

• $112,659.

Answer 1

--Correct Answer = Option #2: $ 191,330

	Budgeted usage:
A	Software Development	2,300,000	pages
B	Training	3,700,000	pages
C	Management	3,100,000	pages
D = A+B+C	Total Budgeted pages	9,100,000	pages
E	Fixed Cost part of Cost Equation	$302,000
F = (E/D) x A	Fixed Cost allocated	$76,330
G	Variable cost part of Equiation	$0.05
H = G x A	Variable cost allocated	$115,000
I = F+H	Total Cost allocated	$191,330	Answer